New suitors show up for Rock rescue

Several fresh contenders for Northern Rock have thrown their hats into the ring, although they'll be hard pressed to table viable rescue plans by the 4 February deadline, according to City sources.

The Treasury's advisors at Goldman Sachs are understood to have sent the term sheet for its £30bn government-backed bail-out to a number of other parties as well as the front-runners - Sir Richard Branson's Virgin and buyout firm Olivant.

A source close to the talks said the 'numbers have now begun to stack up' for private equity firms like JC Flowers and Cerberus, which had pulled out of the running before Christmas.

'I wouldn't be surprised to see some fresh offers coming through,' the source added.

With firmer funding now in place, financial buyers have begun to look at Northern Rock (up 4p to 94p) with fresh eyes. And it is understood that some of Northern Rock's mortgage market rivals have requested a copy of the particulars, fanning speculation that jilted suitor Lloyds TSB (up 2p at 410p) may be plotting another raid.

Even so, some insiders reckon it'll be a stretch for new bidders to formulate a coherent and convincing rescue proposal in a week and a half.

Under Goldman Sachs' bail-out scheme, the government will underwrite some £30bn in Northern Rock loans for at least three years. That means Chancellor Alistair Darling will almost certainly err on the side of caution as he sifts through business plans and management teams presented to him.

The sale document sent out by Goldman is understood to be short on concrete details.

Bidders will have to decide how much they can afford to pay the government for underwriting the bond scheme and how long the guarantee will have to stay in place.

Investors will also have to be appeased. Virgin, in particular, is under pressure to improve the terms of its proposal, which will see existing shareholders significantly diluted.

It is by no means certain yet that Darling will be able to avoid the nightmare scenario of state ownership. Ron Sandler, the ex-Lloyds of London boss who would take over the Rock in the event of nationalisation, has picked former Swiss Re finance chief Ann Godbehere as his deputy.